On average, analysts polled by Bloomberg expected
the multi-level marketing firm to post an adjusted EPS of $1.03
on sales of $1.049 billion.

Herbalife has become one of the most controversial
stocks.

Bill
Ackman, the CEO of Pershing
Square Capital Management, has publicly declared
that he's shorting more than 20 million shares of Herbalife with
a price target of $0. The premise of his thesis is that he
believes Herbalife is a pyramid scheme and regulators will be
induced to investigate the company.

The company also released its 10K
filed yesterday and a short-seller (a.k.a. Bill Ackman) got a
mention in it (emphasis ours).

"In late 2012, a hedge fund manager publicly raised
allegations regarding the legality of our network marketing
program and announced that his fund had taken a significant short
position regarding our common shares, leading to intense public
scrutiny and significant stock price volatility. Following this
public announcement in December 2012, our stock price dropped
from $42.50 on December 18, 2012, to prices as low as $24.24
in the following week. Our stock price has continued to exhibit
heightened volatility....Short sellers expect to make a
profit if our common shares decline in value, and their actions
and their public statements may cause further volatility in our
share price. While a number of traders have publicly
announced that they have taken long positions contrary to the
hedge fund shorting our shares, the existence of such a
significant short interest position and the related publicity may
lead to continued volatility. The volatility of our stock may
cause the value of a shareholder’s investment to decline
rapidly.

Herbalife's management also said that it has contacted the
SEC after
Ackman's presentation, the 10K shows.

"From time to time, we receive inquiries from various
government authorities requesting information from the Company.
Following December 2012 market events and a subsequent meeting we
requested with the staff of the SEC’s Division of Enforcement,
the staff requested information regarding the Company’s business
and financial operations. Consistent with its policies, the
Company is and will fully corporate with these inquiries."

Here's the part from the earnings release: "Guidance for the year also exclusdes one-time costs of $10 million to $20 million, mostly legal and advisory services, relating to the Company's response to information put forth into the marketplace by a short seller which information the Company believes to be inaccurate and misleading."

Canaccord Genuity analyst asks about simplifying the business

Des Walsh says they're working to simplify their nomenclature.

He says a lot of distributors do become one so they can buy the wholesale products at the discount. He says they want to clarify that this group isn't selling the product, but are "engaged as wholesale customers."